For many chiropractors, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenging ordeal.
For many chiropractors, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenging ordeal.
While a chiropractor focuses on proper patient care, savvy real estate agents and brokers are specialized sales people. Their job is to sell chiropractic tenants on leasing their location at the highest possible rental rate
Chiropractic tenants may go through the leasing process two or three times in their entire lifetime – yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a tenant as the amount of rent he or she pays will directly affect the practice’s financial bottom line.
Whether you are negotiating a lease renewal or leasing a new location for the first time for your practice, these are some tips to guide you through the process.
Negotiate to win. All too frequently, tenants enter into lease negotiations unprepared. In some cases, they don’t even try to win the negotiations. If you are not negotiating to win, you won’t.
With big commissions at stake in any lease negotiation, you can be sure the landlord’s agent is negotiating fiercely to win. Remember that it is OK to negotiate assertively.
Be prepared to walk away.Try to set aside your emotions and make objective decisions. Whoever most needs to make a lease deal will give up the most concessions. A good practice in a poor location can lead to poor business.
Ask the right questions. Gathering information about what other tenants in the same location are paying in rent or what incentives they received will give you an upper hand and position you to get a better deal.
Consider that your landlord and his agent know what every other tenant in the property is paying in rent, so you must do your homework too.
Brokers… friend or foe? Real estate agents and brokers typically work for the landlord who pays their commission. It is not normally the agent’s role to get the chiropractic tenant the best deal – it is their job to get the landlord the highest rent and the biggest deposit. The higher the rent you pay, the more commission the agent earns.
If you are researching multiple properties, try to deal directly with the listing agent for each property, rather than let one agent show you around or show you another agent’s listing. Your tenancy is more desirable to the listing agent if he can avoid commission-splitting with other agents.
Never accept the first offer. Even if the first offer seems reasonable, or you have no idea of what to negotiate for, never accept the leasing agent’s first offer. In the real estate industry, most things are negotiable and the landlord fully expects you to counter-offer.
Ask for more than you want. If you want three months free rent, then ask for five months. No one ever gets more than they ask for.
Be prepared for the landlord to counter-offer and negotiate with you as well. Don’t be afraid to hear ‘No’ from the landlord – counter-offers are all part of the game.
Negotiate the deposit. Large deposits are not legally required in a real estate lease agreement for a chiropractic tenant. Deposits are negotiable and, more so than anything else, often serve to compensate the landlord for the real estate commissions he will be paying out to the agents.
If you are negotiating a lease renewal and your landlord is already holding a deposit of yours, negotiate to get that deposit back.
Measure your space. Tenants frequently pay for phantom space. Most commercial tenants are paying their rent per square foot, but often they are not receiving as much space as the lease agreement says.
Negotiate, negotiate. The leasing process is just that – a process, not an event. The more time you have to put the deal together and make counter-offers, the better the chance you have of getting what you really want. Too often, tenants mistakenly try to hammer out the deal in a two- or three-hour marathon session. It is more productive to negotiate in stages over time.
Educate yourself and get help. Unless you have money to throw away, it pays to educate yourself. Taking the time to read about the subject or listen in on a leasing webinar will make a difference. And more importantly, don’t forget to have your lease documents professionally reviewed before you sign them.
With hundreds of thousands of dollars in rent at stake, personal guarantees and other risks, you can’t afford to gamble. In leasing, tenants don’t get what they deserve; they get what they negotiate.
For a copy of our free CD, Leasing Dos & Don’ts for Chiropractic Tenants, please e-mail your request to DaleWillerton@TheLeaseCoach.com.
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Dale Willerton and Jeff Grandfield are commercial lease consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals For Dummies. Contact them at 1-800-738-9202 or e-mail DaleWillerton@TheLeaseCoach.com.
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